Key vocabulary

(Pay As You Earn) job description job evaluation

Affiliation induction work council

job satisfaction semiskilled worker arbitration

self-importance unskilled worker conciliation

gross pay youth training (YT) industrial action

net pay flexible hours lock-out

time rate flexible workforce industrial tribune

fringe benefits redundant

incremental pay scale structural unemployment

performance-related pay picketing

productivity deal shop steward

application form trade association

employment agency trade union

head hunters collective bargaining

U N I T VII

TRADE

Lead-in

Trade is a system to exchange goods and services. Human societies evolved from the Stone Age to the present by exchanging or trading ideas and technologies. People and countries trade with each other to obtain things that are of better quality, less expensive or simply different from goods and services produced at home. Instead of trying to produce everything themselves which would be inefficient, they often concentrate on producing those things that they can produce best, and then trade for other goods and services. By doing so, both the country and the world become wealthier.

1.How do people and countries benefit from trade?

2. What do they usually sell and purchase?

Reading

Text 1

Read the text. Make the list of economic terms used in the text. Be ready to explain what they mean. Ask 5-7 questions about the text.

Basic Terms in Trade

Countries buy and sell various goods as well as various services. Goods bought from abroad, such as food, cars, machines, medicines, books and many others, are called visible imports. Goods sold abroad are called visible exports. Services, such as insurance, freight, tourism, technical expertise and others, are called invisible imports and invisible exports. The total amount of money a country makes including money from visible and invisible exports, for a certain period of time, usually for a year, is Gross National Product, or GNP. The difference between a country's total earnings or GNP, and its total expenditure is called its balance of payments. The difference between what a country receives for its visible exports and what it pays for its visible imports is its balance of trade. If a country sells more goods than it buys, it will have a surplus. If a country buys more than it sells, it will have a deficit.

Many import or export deals are arranged through an exporter's agent or distributor abroad - in this case the importer buys from a company in his own country and this company imports the goods. Alternatively, the deal may be arranged through an importer's buying agent or a buying house acting for the importer, or through an export house based in the exporter's country. In this situation, the exporter sells directly to a company in his own country, who will then export the goods.

Prices for exports may be quoted in the buyer's currency, the seller's currency or in a third 'hard' currency (e.g. US dollars). The price quoted always indicates the terms of delivery, which conform to the international standard known as incoterms. The terms of delivery that are most common depend on the kinds of goods being traded and the countries between which the trade is taking place.

CFR – this price includes Cost and Freight, but not insurance, to a named port of destination in the buyer's country.

CIF – this price covers Cost, Insurance and Freight to a named port of destination in the buyer's country.

EXW – this price is the Ex-Works cost of the goods. The buyer arranges collection from the supplier and pays for freight carriage and insurance.

FOB – this price includes all costs of the goods Free On Board a ship for aircraft) whose destination is stated in the contract. The buyer pays for onward shipment and insurance.

An import/export transaction usually requires a lot of complicated documentation. Many different arrangements have to be made and this can be difficult when one firm is dealing with another firm on the other side of the world. Different documents may be needed, for example: Bill of Lading; Dangerous Goods Note; Sea Waybill; Air Waybill; Shipping Note; Certificate of Insurance.

Text 2

Read the following text and answer the questions that follow it.